Shares of Aflac Incorporated AFL have gained 47.5% in the past year compared with the industry’s 41.8% growth. The Finance sector and the S&P 500 composite index rose 31.4% and 32.4%, respectively, in the same time frame. With a market capitalization of $64.6 billion, the average volume of shares traded in the last three months was 2.3 million.

Aflac benefits from strong U.S. sales, strategic growth initiatives, product enhancements, digital transformation and a solid financial position supporting capital deployment.

The leading supplemental health insurance provider, presently carrying a Zacks Rank #2 (Buy), beat earnings estimates in three of the trailing four quarters and missed the mark once, the average surprise being 8.24%.

Return on equity in the trailing 12 months is currently 16.2%, which is higher than the industry’s average of 16.1%. This substantiates the company’s efficiency in utilizing shareholders’ funds.

Image Source: Zacks Investment Research

Can AFL Retain the Momentum?

The Zacks Consensus Estimate for Aflac’s 2024 earnings is pegged at $6.76 per share, indicating a 8.5% increase from the year-ago figure. The consensus mark for 2025 earnings is pegged at $7.09 per share, indicating a 4.9% increase from the 2024 estimate. 

Aflac’s revenue growth is supported by strong U.S. sales, driven by strategic growth initiatives, high persistency rates and improved productivity. The company designs and markets supplemental insurance products across its U.S. and Japan segments. Net earned premiums in the U.S. unit rose 2.7% year over year in the first half of 2024. Growing sales of AFL’s products are expected to boost premium revenues, which are a major driver of overall revenues for insurers.

Aflac introduces new products and enhances existing offerings to meet evolving customer needs. Partnerships with SKYGEN and Empathy this year bear testament to its efforts to enhance capabilities. 

Aflac also integrates digital solutions into its operations to stay aligned with the ongoing digitization trend. The company's substantial investments in digital transformation have enhanced operational efficiency and enabled a transition to digital sales channels, which is likely to continue to support healthy profit margins going forward.

Aflac's strong financial position, highlighted by a solid cash balance and adequate cash flow, is a key advantage. As of June 30, 2024, cash and cash equivalents increased 40.7% from the 2023-end level. It generated $1.1 billion in operating cash flows in the first half of 2024. This financial strength allows the company to fund growth initiatives and strategically deploy capital through share buybacks and dividend payments. Its leverage ratio of 22.2% at the second-quarter end was below the industry average of 22.5%.